The government today said it has in-principle decided to allow foreign direct investment from Pakistan and the move was expected to enhance commercial engagement between the two countries.

The government on Wednesday said it has in-principle decided to allow foreign direct investment from Pakistan and the move was expected to enhance commercial engagement between the two countries.

When asked whether government has decided in principle to allow FDI from Pakistan, Commerce and Industry minister Anand Sharma, in a written reply to the Rajya Sabha said "yes".

However, he said, that no foreign direct investment (FDI) targets have been fixed.

"The move is expected to enhance the commercial engagement and bilateral trade between India and Pakistan," Sharma added.

He said during discussions, both sides agreed on the desirability of promoting bilateral investments and removing impediments for such investments.

"A greater degree of bilateral investment could strengthen exports from India to Pakistan. Exports in sectors such as agriculture produce, chemicals, textiles, auto components could be enhanced through bilateral investment," Sharma said.

To another question, Minister of State for Commerce and Industry Jyotiraditya Scindia, said the issue of permitting FDI from Pakistan was subsequently examined through inter-ministerial consultations.

"Following consultations, the ministry of finance has been requested to take steps to appropriately amend the relevant Foreign Exchange Management Act (FEMA) Regulations," Scindia said.

He said the proposal envisages allowing investment from the neighbouring country through the government approval route, "i.e after scrutiny by the Foreign Investment Promotion Board (FIPB), wherein relevant considerations, including security considerations, are taken into account".

Currently, FDI from Pakistan is not permitted.

At present, the bilateral trade between the countries stood at USD 2.7 billion.